Informal institutions—the shared but unwritten norms and values of a society—are a critical element of the study of international business. However, research on these institutions is theoretically and empirically challenging. For this reason, “there has been limited work on the topic, a lack of clarity on how to conceptualize and measure informal institutions, and a limited understanding of the role they play” in international business, say HKUST’s Jiatao Li and colleagues. Their editorial introduces a new special issue of the Journal of International Business Studies that focuses on the importance of informal institutions in international business.

The authors conduct a review of related studies, define the concepts and paradigms used in the field, identify the gaps in the literature, and suggest avenues for future research. “The goal,” they say, “is to stimulate the academic conversation on the topic by showing how informal institutions are essential in studying international business.”

“Informal institutions matter and need to be studied in their own right,” the authors tell us. However, they have received much less attention to date than formal institutions—codified rules and constraints such as laws, policies, contracts, and formal agreements. A key reason for this gap is that formal institutions tend to be straightforward to conceptualize and measure, whereas studies of informal institutions must often use imperfect measurements and conceptualizations. This presents challenges to publication in top journals and thus reduces scholars’ incentives to pursue such work.

“This gap is particularly problematic in developing and emerging markets with weaker formal institutions,” warn the authors, “where informal institutions may have a more prominent role.”

The researchers’ exploration of informal institutions thus has important implications for international business managers and policy makers. They identify the need for further research on informal institutions in developing countries, comparative studies of different parts of the world, and explorations of how informal institutions can influence international firm strategy. Because international business research focuses on context, it is particularly well suited to this study of informal institutions across contextual settings.

The study of informal institutions may also be useful in advancing the theoretical frameworks used in international business, the authors say, “by bringing an important contextual element that they often lack.” Research in this vein “could lead to rich theoretical advances and perhaps even breakthroughs” in the field.

In addition, the interdisciplinary nature of the international business field will prove beneficial because informal institutions often cross disciplines. Most related work has been conducted in the subfields of international management and strategy. According to the researchers, however, the entire field would benefit from further research on other sub-disciplines, such as international finance, accounting, and marketing.

Ultimately, “informal institutions are as relevant and meaningful as their formal counterparts” for international business, the researchers emphasize. Therefore, international practitioners “would be well served learning as much about the informal institutional environment of a market, as well as its relationship to the formal institutional environment.” This important special issue is only the beginning of such work. “We look forward to a rich and engaging academic conversation on the topic in the years to come,” the authors conclude.